Department of Labor Announces Increase to Minimum Wage for Government Contractors

Effective January 1, 2018, the minimum wage for federal contractors working on or in connection with contracts covered by Executive Order 13658 will increase to $10.35 per hour. The current minimum wage under Executive Order 13658 is $10.20 per hour. The Wage and Hour Division of the U.S. Department of Labor posted notice of the increased wage requirement in the Federal Register on September 15, 2017. See 82 Fed. Reg. 43408.

Contracts awarded on or after January 1, 2015, are subject to an increased minimum wage under the Executive Order. Contracts entered into prior to January 1, 2015, also generally will be subject to the Executive Order if, through bilateral negotiation, on or after January 1, 2015, the contract is renewed, extended, or amended pursuant to a modification that is outside the scope of the contract.

The minimum wage requirement of the Executive Order generally does not apply to federal grants, contracts with Indian Tribes, contracts for services that are exempted from coverage under the Service Contract Act, and construction contracts that are excluded from coverage under the Davis-Bacon Act. The Executive Order also excludes certain workers from entitlement to the minimum wage rate. For example, FLSA-covered workers who perform support work “in connection with a contract” for less than 20 percent of their hours in a workweek are not entitled to the increased minimum wage.

Federal contractors working on or in connection with contracts covered by the Executive Order should prepare to implement the increased wage rate in 2018, and should notify their workers of the applicable rate. Pursuant to 29 CFR 10.29, contractors are required to notify all workers performing on or in connection with a covered contract of the applicable minimum wage rate. A sample poster that contractors can display in a prominent or accessible place at the worksite is published at 82 Fed. Reg. 43412, Appendix B.